The buy-back starts today and runs for six months to 20 December. The amnesty to surrender firearms, parts, magazines and ammunition runs until the same date.

Compensation will only be paid to those gunowners with a valid firearms licence. Compensation for prohibited parts and magazines will not require a valid licence

A new option means the Crown will stump up to $300 for gun owners to have some prohibited firearms modified by approved gunsmiths to make them lawful.

Owners of unique or rare prohibited items may also apply for compensation.

The change to gun laws banning military style semi-automatic firearms, magazines and parts that can be used to assemble prohibited firearms was in response to the Christchurch terror attacks in which 51 people were killed.

"The buy-back and amnesty has one objective: to remove the most dangerous weapons from circulation following the loss of life at Al-Noor and Linwood mosques on 15 March," Police Minister Stuart Nash said.

"The compensation scheme recognises licensed firearms owners are now in possession of prohibited items through no fault of their own, but because of a law passed by almost the entire Parliament."

Finance Minister Grant Robertson said the $150m already set aside for the scheme was based on officials' initial advice.

"The ACC Board has also agreed to allocate $40 million in recognition the buy-back scheme is likely to contribute to a reduction in the severity and incidence of injuries from the prohibited firearms," he said.

"There is high uncertainty around any costings, owing to the lack of information on the number of prohibited items, their type and condition. Better information will be forthcoming once the buy-back is underway and volumes and conditions of firearms are clearer. As I stated on Budget day, if we need to top up the funding we will."